A company purchased on credit and received $2,500 worth of goods to be sold in their stores.How would the event be recorded?
A)A $2,500 increase in inventory and a $2,500 increase in expenses.
B)A $2,500 increase in expenses and a $2,500 increase in accounts payable
C)A $2,500 increase in inventory and a $2,500 increase in accounts payable.
D)The event would not be recorded at this time.

Question

Quizplus · Accepted Answer

The event involves the purchase of goods on credit, which means the company owes the supplier money. Therefore, there will be an increase in accounts payable (money owed to the supplier) by $2,500. At the same time, the company has also received goods that they plan to sell, which means an increase in inventory by $2,500. Therefore, the correct entry would be a $2,500 increase in inventory and a $2,500 increase in accounts payable.

A Company Purchased on Credit and Received $2,500 Worth of Goods